On August 18th, the economic data released by the United States came in weaker than expected, which has cooled market expectations for further interest rate hikes. This, in turn, has weighed on the US dollar, providing support for gold prices. Concurrently, sustained gold purchases by global central banks are offering medium-to-long-term underpinning, while recurring geopolitical conflicts in the Middle East continue to inject volatility into the safe-haven market.
Market participants are now awaiting the release of the Federal Reserve's meeting minutes, leading to a palpable sense of caution. The fundamental news flow is largely serving as a source of disturbance, with price action primarily following the prevailing technical structure. Gold rose on Monday, extending the rebound from Friday's session, as it oscillated higher above the 4367 level throughout the day, ultimately touching a high near 4428.
The precious metal has now entered a crucial zone, with traders closely watching the breakout potential at 4450. While the short-term momentum remains constructive, market strategists advise against initiating fresh longs even if this level is breached. The structural outlook suggests that a modest pullback could be on the horizon, likely representing a small-scale correction. The prudent approach would be to await a dip towards key support levels before entering positions in the direction of the broader uptrend.
On the daily chart, the rebound has allowed gold to reclaim its 5-day and 10-day moving averages, closing with a solid bullish candlestick that signals a restoration of bullish momentum. The MACD indicator, which had previously shown a bearish crossover at higher levels, is now displaying converging green histogram bars, suggesting waning downside pressure. Meanwhile, the Bollinger Bands have begun to expand slightly once again, and prices have climbed back above the middle band, indicating a resurgence of buying interest.
The candlestick pattern reveals a robust bounce from lower levels, though the battle between bulls and bears remains intense. While the center of gravity has shifted upwards, the market has yet to clear the formidable resistance from prior highs, and the validity of the overhead supply zone requires further confirmation. On the 4-hour timeframe, the Bollinger Bands are tilting upwards, with prices firmly established above the MA20 and MA60 moving averages.
A sequence of bullish candles, coupled with a golden cross in the short-term indicators, underscores the current advantage held by buyers. However, the RSI on the hourly chart is approaching overbought territory, suggesting a need for short-term consolidation or a pullback to relieve the stretched conditions. Given this, chasing the rally at current levels is not recommended; instead, waiting for a retracement to support levels would offer a more favorable risk-reward entry point.
In summary, the broader bullish trend remains intact, but the short-term rebound has released much of its energy, and significant overhead pressure persists. Immediate resistance is identified in the 4435-4450 range. On the downside, the first support zone lies between 4380-4390, with the pivotal level for bulls and bears at 4365.
Trading strategy: 1. Consider initiating long positions on a pullback to the 4380-4390 zone, with a stop-loss below 4370, targeting 4430-4440. 2. Alternatively, a short position could be considered on a rally into the 4430-4440 area, with a stop-loss above 4450, aiming for a retracement back to 4395-4385.
This content is for reference only and does not constitute investment advice. Investors should operate at their own risk.